Maximising opportunities in the online marketplace Web 2.0 and beyond Image: jimkster @ Flickr - http://flickr.com/photos/jimkster/2723151022/ Image: jimkster @ Flickr - http://flickr.com/photos/jimkster/2723151022/ Image: jimkster @ Flickr - http://flickr.com/photos/jimkster/2723151022/ Image: jimkster @ Flickr - http://flickr.com/photos/jimkster/2723151022/ Image: jimkster @ Flickr - http://flickr.com/photos/jimkster/2723151022/ Image: jimkster @ Flickr - http://flickr.com/photos/jimkster/2723151022/ dot Image: ten safe frogs @ flickr - http://flickr.com/photos/tensafefrogs/724682692/ Image: ten safe frogs @ flickr - http://flickr.com/photos/tensafefrogs/724682692/ Letʼs start by looking at what “Web 2.0” really is... Letʼs start by looking at what “Web 2.0” really is... RSS Really Simple Syndication • The “glue” between systems (for content syndication) Further reading: • Common Craft - RSS in plain English: http://tinyurl.com/2s9uat RSS Web applications • Gmail is just one of the many web applications • Facilitates collaboration and other network benefits RSS Web applications Developer tools Web services, AJAX, agile programming • Asynchronous Javascript And XML • Collection of existing technologies that turn a browser into a “rich client” • More responsive experience for users • Agile programming methodology - quick to market, iterative development Further reading: • Jesse James Garret (Adaptive Path) - Ajax: A New Approach to Web Applications:http://tinyurl.com/29nlsm • 37signals - Getting Real: http://gettingreal.37signals.com/ Image: dizid @ flickr - http://flickr.com/photos/dizid/96491998/ Itʼs the combination of technology and the social effects that they enable. Image: dizid @ flickr - http://flickr.com/photos/dizid/96491998/ Further reading: • Clay Shirky - “Here comes everybody”: http://tr.im/9dt • The value increases the more “nodes” that are in the network (“A world of ends”) • Provide personal value first... • Derive aggregate social (and organisational) benefits • Value increases the more itʼs used Further reading: • Joshua Porter - Leveraging the network: http://tinyurl.com/2n9l97 • Doc Searls & David Weinberger - World of Ends: http://www.worldofends.com/ • The value increases the more “nodes” that are in the network (“A world of ends”) • Provide personal value first... • Derive aggregate social (and organisational) benefits • Value increases the more itʼs used Further reading: • Joshua Porter - Leveraging the network: http://tinyurl.com/2n9l97 • Doc Searls & David Weinberger - World of Ends: http://www.worldofends.com/ • “Social bookmarking” site – the “object” is a link • Add a link, tag (categorise) and search • Personal utility first, social value second - leveraging the network • Social value = seeing what friends are linking, what links are popular for particular categories (tags) etc. Further reading: • Joshua Porter - Leveraging the network: http://tinyurl.com/2n9l97 Head Long tail Popularity Products • Looking purely at the “product” side of things • Chris Anderson (Editor of Wired) authored “The Long Tail” • A (slight) majority of Amazonʼs $$ sales comes from the aggregate sales of “non-hits” • David Weinberger adds to the discussion with his book “Everything is Miscellaneous” Further reading: • The Long Tail (Book): http://tinyurl.com/2aug85 • Everything is Miscellaneous (Book): http://tinyurl.com/2zpeqz • iTunes & Amazon exemplify the long tail effect • Amazon: user reviews (leveraging network), affiliates (flipping the funnel) • ebay: reputation system (leveraging network), breadth of items and decentralised distribution (long tail effect) • Google: using aggregate data of user activity for commercial gain (advertising) Viral expansion loops • Embedded “viral expansion loops” into the product/business model • User signs up, then prompts/encourages other users to sign-up • Viral expansion loops are trickier in B2B models Further reading: • Fast Company - “Ningʼ s Infinite Ambition”: http://tr.im/1vm • User signs up, then prompts/encourages other users to sign-up • Viral expansion loops are trickier in B2B models Further reading: • Fast Company - “Ningʼ s Infinite Ambition”: http://tr.im/1vm • User signs up, then prompts/encourages other users to sign-up • Viral expansion loops are trickier in B2B models Further reading: • Fast Company - “Ningʼ s Infinite Ambition”: http://tr.im/1vm http://cpacongress.ning.com/ • Ning is a prime example of viral expansion loops Further reading: • CPA Congress community: http://cpacongress.ning.com/ Image: dhaneshr @ flickr - http://flickr.com/photos/dhaneshr/2786992830/ Start small. Fail early, learn often... • Do one thing and do it well • Trust your users - user-centered design • *Engage* your audience - learn their needs, learn their needs • Respond intelligently based on user needs and your expertise, not necessarily specific user requests • Try things - see what sticks - success may come from unexpected places Image: dhaneshr @ flickr - http://flickr.com/photos/dhaneshr/2786992830/ Further reading: • 37signals - “Getting Real”: http://tr.im/1ul Agile development Image: Olivier Delaere @ flickr - http://flickr.com/photos/acinonyx1/1225083175/ • Agile development is particularly well suited to web products • Build only what you need; get it to the users; learn, refine, evolve • Test driven development - allows for fast releases with confidence Image: Olivier Delaere @ flickr - http://flickr.com/photos/acinonyx1/1225083175/ API Application Programming Interface Image: fpsurgeon @ flickr - http://flickr.com/photos/fpsurgeon/2384522828/ • Give your audience the tools to expand your product • Develop an eco-system of products around yours • Opportunities arise that you may not have thought of, or donʼt have the resources to provide yourself • In 2006: Over 40% of all Salesforce traffic via API, third-party sellers account for 28% of Amazon revenue ($490 million per quarter), eBay transactions growing 84% annually (source: http://tr.im/9dq) • If you donʼt support users - they will find someone who will, or find a way to do it themselves Image: fpsurgeon @ flickr - http://flickr.com/photos/fpsurgeon/2384522828/ Further reading: • John Musser - “How much revenue via APIs?”: http://tr.im/9dq Image: covilha @ Flickr - http://flickr.com/photos/11139043@N00/1439804758/ • Many different revenue models • Retail (sell products) • Freemium - free version, charge for additional features • Subscription/Pay-for-use • Try before you buy • Monetise user generated “content” - not just advertising > Flickr and eBay could be considered this way. • “Clip of sale”: Flickr, eBay, RedBubble, Etsy • Revenue sharing! • Infrastructure/White label • Indirectly Image: covilha @ Flickr - http://flickr.com/photos/11139043@N00/1439804758/ Further reading: • Laurel Papworth - “Social Media Monetization and Revenue”: http://tr.im/ait • David Heinemeier Hansson - “The secret to making money online”: http://tr.im/c0v The “because” effect: What happens when you make more money because of, rather than with something. Doc Searls • In reference to blogs in particular, but applies in other ways • Amazon referrals program Further reading: • Doc Searls - Adventures with Because Effects: http://tinyurl.com/2rhr5n • Gives stuff away for free, in return for market intelligence • Monetised primarily through advertising (primary - “because of”), though also on-selling infrastructure services (secondary - “with”) Further reading: • Chris Anderson - “Free! Why $0.00 is the future of business”: http://tr.im/9ec Further reading: • David Heinemeier Hansson at Startup School 08: http://tr.im/c2p Further reading: • David Heinemeier Hansson at Startup School 08: http://tr.im/c2p • Apple App Store - high volume, low cost - traditional model without the free trial but low up-front cost • To August 2008: 60 million downloads, $30m revenue - ~$1m per day revenue • $250,000 for developer of $5 app (over 2 months) Further reading: • Ars Technica - “Put up with iTunes App Store rules, collect $250,000”: http://tr.im/9er • Wall Street Journal - “iPhone Software Sales Take Off: Apple's Jobs ”: http://tr.im/9et • Each application does one thing well • Freemium model • Low-velocity viral expansion loop • Each application does one thing well • Freemium model • Low-velocity viral expansion loop Further reading: • 37signals - “Getting Real”: http://gettingreal.37signals.com/ • NetAccounts - web application competing with MYOB and Quicken • Freemium model • API for integration with other online services such as shopping carts • Started small - grown to become fully featured application • Expanding internationally Disclosure: I am a shareholder and was previously a developer on NetAccounts • In the interest of fairness - Xero is another example • NZ-based, but entering the Australian market • Limited API available to network partners • Revenue generated by financial services referrals • Personal benefit first - managing finances • Leverage the network for collective social benefit - places where you can save money, comparisons to aggregate data • Similar to Mint • Freemium model • Try before you buy - per user license fees • Salesforce application platform enables enterprise integration • Eco-system of applications and services built up around the platform/API • In 2006, 40% of all traffic came via their API (source: http://tr.im/9dq) • Misses opportunities: Doesnʼt leverage the online network. • Traditional sales model - sales-people + partner channels to “distribute”. Not viral or organic growth (no viral expansion loop). • Raising capital for smaller or larger projects (essentially